Texas Amends Statutes Regarding Loan Officers and Licensing Fees
by: Matthew Dailey
The state of Texas recently adopted changes under the Texas Finance Code which grants rulemaking authority to the Finance Commission of Texas. The amendments concern mortgage loan originators and bankers and the licensing regulations that affect them. These amendments are effective as of September 15, 2013.
7TAC§§80.100, 80.103, 81.100, 81.103 – Licensing
Any person who holds themselves out to be a “mortgage loan originator,” “mortgage banker” or “loan officer” must apply for and receive a license under the Finance Code. It has always been the case that the Commissioner of Financial Institutions has authority to conduct an investigation against an originator if there is reasonable cause to suspect or believe that an originator may have been convicted of a criminal offense which may constitute grounds for the suspension or revocation of that originator’s license. Also, the Commissioner may require such additional, clarifying, or supplemental information from any applicant for the issuance of any license pursuant to Finance Code, Chapter 156 as is deemed necessary or advisable to determine that the requirements of Finance Code, Chapter 156 have been met. However, the Legislature has now allowed the Commissioner or the Commissioner’s designee to issue a license on a conditional basis at their own discretion after reviewing the circumstances of each situation. §80.100, §81.100.
Also, in a minor change, for examinations that are conducted out of state, the Commissioner may collect reimbursement of actual expenses in compliance with department’s policies and procedures. §80.103, §81.103.
These changes apply not only to Finance Code §156 dealing with Mortgage Loan Originators and Mortgage Loan Companies but also now to Finance Code §157 dealing with Mortgage Bankers.
7TAC§§81.106, 81.107, 81.108 – Education and Background
The Finance Commission of Texas also adopted new statutes regarding the education and background of mortgage loan originators. The Commission now requires pre-licensing and continuing education courses under Finance Code, Chapter 180 and also that they be reviewed and approved by the Nationwide Mortgage Licensing System and Registry. In addition to the pre-licensing educational requirements, in Finance Code, Chapter 180, a residential mortgage loan originator must complete three hours of education classes specifically relating to Texas statutes and rules.§81.106.
Next, the Commission enacted a statute that requires loan officers to disclose every location where he or she is conducting business with the Nationwide Mortgage Licensing System and notify the Commission of any change of address, name change or changed company. §81.107.
Lastly, every mortgage loan origination applicant shall provide authorization and fingerprints as prescribed by the Nationwide Mortgage Licensing System and Registry necessary to conduct a criminal background history check through the Federal Bureau of Investigation, the Texas Department of Public Safety. The applicant must allow the Commissioner to obtain an independent credit report and provide any knowledge of civil or criminal findings against the applicant as well. §81.108.
About the Author:
Matthew Daily is Associate Counsel at Bankers Advisory, Inc. He is a graduate of Stonehill College and earned his Juris Doctor at the New England School of Law. He is admitted to the Massachusetts Bar. Matthew can be reached at matthew@bankersadvisory.com
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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